|RELIANCE STEEL & ALUMINUM CO filed this Form DEFR14A on 04/08/2019|
Hedging Policy. Directors, officers and employees subject to the quarterly trading blackout under our Insider Trading and Securities Compliance Policy are prohibited from engaging in hedging or monetization transactions of Company securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds.
Pledging Policy. Directors, officers and employees subject to the Company’s quarterly trading blackout under our Insider Trading and Securities Compliance Policy are prohibited from holding securities of the Company in a margin account or pledging such securities as collateral for loans, except for securities pledged as of the effective date of the policy or which have already been pledged at the time an individual becomes a director. Only one such “grandfathered” arrangement exists pertaining to shares of Reliance common stock pledged by a director as security for a line of credit on which there was no amount outstanding as of December 31, 2018.
Under Section 162(m) of the Internal Revenue Code, a publicly held company generally is limited to a $1 million annual tax deduction for compensation paid to each of its “covered employees.” Prior to the enactment of the Tax Cuts and Jobs Act of 2017, which was signed into law on December 22, 2017, a publicly held company’s covered employees included its chief executive officer and three other most highly compensated executive officers (other than the chief financial officer), and certain “qualified performance-based compensation” was excluded from the $1 million deduction limit. The Tax Cuts and Jobs Act of 2017 made certain changes to Section 162(m), effective for taxable years beginning after December 31, 2017. These changes include, among others, expanding the definition of “covered employee” to include a publicly held company’s chief financial officer and repealing the qualified performance-based compensation exception, subject to a transition rule for compensation provided pursuant to a written binding contract which was in effect on November 2, 2017 and which was not modified in any material respect on or after that date.
The Company, however, has not taken any steps at this time to change its compensation program to reflect the change in the tax code. While the Compensation Committee believes that the tax deductibility of compensation is a factor to be considered, it expects that tax deductibility will be less of a factor in 2019 and future years due to the elimination of the performance-based compensation deduction under Section 162(m). The Compensation Committee retains the flexibility to grant awards it determines to be in the best interests of the Company and its stockholders even if the award is not deductible for tax purposes. The Compensation Committee believes that its ability to exercise such discretion is in the best interests of the Company and our stockholders.